Student Loan Payback: a 60-Second Guide

Are student loans the next housing bubble? They're certainly making headlines right now. The U.S. Senate recently failed to advance two bills aimed at preventing interest rates on subsidized Stafford loans from doubling on July 1.

But the current debate is over the interest rate on new loans, so only students who are still in school and actively borrowing will be affected by the outcome. As someone who's already paying her student loans, I often want to ask, "What about me?"

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If you too are no longer in school and have student loans to pay back, here's an abridged guide to successfully tackling your student loan debt.

1. Understand your obligations

While you may not have fully grasped this when you were signing the dotted line as a freshmen (no judgment: I certainly didn't!), student loans aren't like other types of debt. For one thing, student loans are almost never dischargeable in bankruptcy, even if you didn't complete your degree or are unhappy with the education you received. Your tax returns or wages can be garnished if you default on your student loans.

If you also have credit card debt, make sure you have a plan for that too. If interest charges are slowing you down, do some research on credit cards with balance-transfer promotions. A zero-interest balance transfer offer can give you some breathing room and help you make strides on other debt while you are in your student loan grace period (see below).

2. Set aside your payment -- even in the grace period

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The average student loan debt for those who graduated in 2011 is $26,600, according to the Project on Student Debt. Under the standard 10-year repayment plan, that equals a payment of about $300 per month. Fortunately, there is a six-month grace period with no payments when you graduate or otherwise drop below half-time status.

As soon as you leave school, start putting your future payment amount in an online savings account every month. This will serve two purposes: First, it will help build an emergency fund. Second, if you can't afford your future monthly payment on your current salary, then you have time to look into adjusting your lifestyle before your grace period ends.

3. Prepare your budget

When you graduate and get a "real job," you may expect to have more money than you had when you were a student. But this may not be the case. Having to make some budget cuts can sting, but given the consequences of default, you may not have a choice.

Generally speaking, if your expenses exceed your income, you have two options: spend less or earn more. On the "spend less" side, you can cancel cable, switch to a pay-as-you-go cell phone plan or start cooking at home more often. On the "earn more" side, you can sell things you own, get a second job or freelance.

4. Communicate with your lender

If you've tried everything and still can't make your monthly payment, don't stick your head in the sand! Your lender will work with you, but you have to be proactive. Sometimes, the best option is to switch to a plan with a lower monthly payment.

Unfortunately, this usually means making payments for a longer period of time and paying significantly more in interest. However, once you are established in your career and have a raise or two under your belt, you can always make extra payments.

At first, it was frightening for me to think about my student loan debt. After I finally did, however, I realized that what I was actually scared of was the unknown. Once I sat down and made a plan of attack, I felt much better about my situation. So give it a try!